“By approving by an overwhelming majority two legislative texts that strengthen the capital requirements of European banks and put a brake on the bonuses paid to managers, and then a resolution that urges the European Central Bank to ensure that the advantageous loans to credit institutions are ultimately directed to support the real economy, the European Parliament has activated a virtuous mechanism that will be able to restart the growth of businesses and consequently the recovery of employment”. In this interview given to "FIRSTonline" in Strasbourg immediately after the third vote, Giovanni La Via - member of the Parliamentary Budget Committee as well as head of the Italian delegation in the group of the European People's Party - explains the reasons which lead him to be fairly optimistic about the future of banks, businesses and employment.
FIRST online – Do you really think, honorable Member, that two European laws and a resolution from the Strasbourg Parliament can have positive effects in so many directions?
Street - I say that we have taken an important step along a journey that began, not only in Italy, after the great crisis of 29. A path whose objective was, and still is, to protect the banks and at the same time guarantee deposits, to prevent a financial crisis, limited to one or more institutions or extended to the entire banking system, from being buffered with an intervention of the State and then passed on to tax payers.
FIRST online – And will the new rules just approved by the European Parliament achieve this goal?
Street - They were written and approved for this purpose. But no one has a glass ball to read the future. However I am confident, also encouraged by the numbers of votes, obtained thanks to the sharing of objectives achieved among the major political groups in Strasbourg.
FIRST online – If someone were to say that by approving these new rules, which will enter into force on XNUMX January next year, the European Parliament has done the more than eight thousand European banks a favor, how would you reply?
Street - I would say that the obligation to strengthen the assets of a credit institution constitutes a higher guarantee for savers, but also for those who have received a loan or taken out a mortgage. And ultimately for the bank itself, whose greater financial solidity will be able to increase the influx of new customers.
FIRST online – And what relationship does the obligation to contain bonuses for its managers have with the solidity of a bank? Isn't that a form of limitation of the freedom of enterprise?
Street - I do not think so. The rule we approved does not enter into the merits of the remuneration of a senior executive, which remains entrusted to collective agreements and agreements between the parties. And it has a motivation, as well as obviously ethical, also economic. Because it can happen – and it does happen – that an executive, in order to achieve a (legitimate, for heaven's sake) goal of personal enrichment, ventures into high-risk financial operations which, if they go through, can get him a substantial increase in remuneration, the bonus precisely. But, if they fail, they do harm to the bank.
FIRST online – Mrs, what is the relationship between the resolution which invites the ECB to guide the final destination of loans to banks at a rate of 1% and the new rules on the capital requirements of credit institutions and those on executive bonuses?
Route – With the resolution, Parliament has come full circle. Let's start with the previous ones. In the period in which the financial crisis reached its climax, the Eurotower injected liquidity into the European banking system in a couple of years, a little more or less, for a total of one trillion at a rate of 1%. With these resources obtained at very low cost, the banks bought government bonds with yields exceeding 3%.
FIRST online – A good deal for lenders…
Street - Of course, those earnings were a shot in the arm for the most troubled banks. But at the same time they have increased the demand for public bonds issued by the countries most in difficulty (including Italy) and consequently have led to a drop in yields, with a lowering of the spread and Treasury spending to pay interest.
FIRST online – Now however, with the resolution just approved, Parliament is asking Draghi to change his policy. It would seem nonsense…
Street - But now the context has changed. Let's take Italy. Despite the complexity of the political moment, the spread remains low and government bonds (as demonstrated by the race for the BTP Italia) are snapped up. But, as the European Parliament has underlined, the economy is gasping for air and unemployment is rising every day. So it is right to urge the ECB to change its tune: subsidized loans to banks yes, but bound to the obligation to allocate them to support the real economy and small businesses in particular.
FIRST online – To achieve what goal?
Street - Now the goal is the growth of the economy and the reduction of unemployment. And it is crucial that the liquidity put into circulation by Frankfurt is injected into households, and obviously also into businesses. In particular the small ones, ie those that are able to increase employment significantly and in a short time.
